Brand equity vs brand value are two related but distinct concepts in the field of marketing and brand management. Understanding the meaning of both is crucial to know how they affect companies and how organic SEO can help with the process.
What is Brand Equity?
It refers to the intangible and perceived value of a brand in the minds of consumers. Represents the associations, perceptions, and experiences consumers have regarding a particular brand.
Such equality is built over time through advertising, product design, quality, customer satisfaction, and other factors. Also, what it essentially represents is a brand’s reputation and recognition in the market where it is established.
What is Brand Value?
Known as the quantitative measure of the financial value of a brand, brand value is based on a company’s economic performance and future projections, and it can be expressed in monetary terms.
It is calculated using different approaches, such as the brand’s market value, the present value of future cash flows generated by it, or the accounting value. It is commonly used in financial evaluations, company acquisitions, and mergers.
Highlighting that brand equity vs brand value are interconnected is extremely important. A company with high brand equity tends to have a higher brand value, as positive associations and perceptions in the minds of consumers can translate into a competitive advantage and higher economic performance.
However, a business can have high financial value but low brand equity if it fails to generate a meaningful connection with consumers.
How Brand Equity Impacts Brand Value
The power of brand equity is crucial for the success of a company. Brand equity refers to the intangible value that a brand holds in the minds of consumers and its ability to generate preference and loyalty. It can significantly impact the value of a business in several ways:
A base of loyal customers who prefer its products or services over the competition is vital. This loyalty leads to higher customer retention and to a steady revenue stream. Loyal customers are also more likely to recommend the brand to others, which can generate new business and increase the brand’s value.
Perception of Quality
Possessing high brand equity is perceived as quality brand. Consumers trust the brand and associate its products or services with positive attributes such as reliability, innovation, or prestige. This perception of quality allows the company to charge higher prices and maintain a competitive advantage in the market.
Brand equity can provide a sustainable competitive advantage. A strong brand can differentiate itself from the competition and create entry barriers for new competitors. Consumers are willing to pay more for a recognized and trustworthy brand, making it difficult for other brands to penetrate the market.
Substantial equity can leverage reputation and trust to launch new product lines or expand into new markets. Consumers will be more willing to try brand extensions due to their familiarity and trust in the leading brand. This can generate additional growth and increase the brand’s value.
Equity also has an impact on the financial value of a company. A strong and well-positioned brand can have significant value in the company’s financial statements, influencing its market value and attracting investors.
How to Build and Measure Brand Equity to Increase Value
Building and measuring brand equity is essential to increase the value of a company. To do so, some steps need to be made and measured, such as:
- Define the brand identity: establish a clear and consistent brand identity. This involves defining the company’s vision, mission, values, and personality. A robust personal identity provides a solid foundation for building brand equity.
- Know your target audience: understand your target audience and their needs. Conduct market research to gather information about your consumers, their preferences, behaviors, and perceptions of your brand and competitors. SEO agencies like Kala can help you with it.
- Brand positioning: Clearly define how you want your brand to be perceived compared to your competitors. Developing a unique value proposition and communicating it consistently across all consumer touchpoints is needed. This helps to build a strong and differentiated image.
- Create brand assets: assets are visual, auditory, and symbolic elements representing your brand. They include the logo, colors, slogan, typography, sounds, and other characters. Consistent and memorable assets reinforce the identity and positioning of your brand.
- Consistent communication: brand should be consistent across all channels and consumer touchpoints. The use of clear messaging reinforces the key attributes and values of your brand. This will help build a cohesive image and strengthen brand equity.
- Measure brand equity: agencies like Kala use various metrics and techniques. Some standard metrics include brand recognition, spontaneous recall, preference, consumer loyalty, and brand associations. Tracking studies and periodic surveys are also of immense help.
- Competitive analysis: regularly monitor your competitors and compare your brand equity with theirs. This will help you identify improvement opportunities and stay informed about market trends and changes.
Always remember that building brand equity is an ongoing process that requires constant effort. Over time, substantial brand equity can increase brand value, greater consumer loyalty, and sustainable competitive advantages.
How to Calculate the Value of a Brand?
Calculating the value of a brand is a complex process that involves multiple factors and approaches. There is no formula to determine a brand’s exact value, but several commonly used methods and procedures exist.
This approach is based on the cost required to recreate or replace the brand. It includes the cost of designing, developing, legally registering and promoting the brand. However, it does not consider the actual market value of the brand and tends to underestimate it.
It is based on the brand’s market value, i.e., what someone would be willing to pay for it in the market. Comparative valuation methods or recent transaction methods can be used to determine the value of similar brands. It considers market perception and demand, which can provide a more accurate estimation of the brand’s value.
Income focuses on the generation by the brand. It is based on the expected future income streams directly attributed to the brand. Different methods are used to calculate this value, such as the discounted cash flow (DCF) method, which considers projected revenues, associated costs, and an appropriate discount rate.
How Can SEO Help Build Brand Value?
Search engine optimization can play a significant role in building brand value. These are some of the several ways in which SEO can contribute to this process:
- Visibility: SEO helps improve a brand’s visibility in search engine results. When a brand appears in the top positions of search engines for relevant queries, it increases its exposure and becomes more visible to users. This can generate greater brand awareness and positive perception.
- Generation of qualified traffic: by optimizing a brand’s website for relevant keywords, SEO attracts audiences interested in the brand’s products or services. This high-quality traffic is more likely to convert into customers, directly contributing to the brand’s value by boosting sales and revenue.
- Improvement of user experience: SEO is not just about ranking in search engines; it also involves providing a positive UX. By optimizing technical aspects of the website, such as page load speed, navigation structure, and accessibility, the UX is enhanced. This leads to satisfaction and trust.
- Establishment of authority and reputation: optimization builds a brand’s online dominance. Creating quality and relevant content optimized for relevant keywords can position a brand as a leader in its industry. It increases consumer trust, as the brand is perceived as a reliable source of information and solutions.
- Link generation: optimized content is more likely to be shared on social media, increasing brand visibility and attracting more followers and potential customers. When other relevant websites link to a brand’s site, it improves visibility and conveys a signal of trust and relevance, raising its value.
A robust SEO strategy can strengthen a brand’s online presence and market positioning, contributing to its long-term value. Kala Agency experts are capable professionals able to take on these tasks and ensure your company can raise its clicks, popularity, and revenue.
Knowing the differences between brand value and brand equity is significant to understand its relevance in business and how SEO can affect it. The correct techniques and methods can increase any company’s visibility, clicks, value, and revenue.
Remember that some agencies at Kala specialize in these types of help, ensuring your website can reach the top of the rankings online, along with many other things.